The Pension Benefit Guaranty Corporation (“PBGC”) filed a motion for an order under Bankruptcy Rule 2004 directing AMR Corporation and its affiliates (“AMR”) to produce documents and authorizing the issuance of subpoenas for testimony relating to four single-employer defined-benefit plans (the “Pension Plans”) maintained by AMR for its approximately 130,000 employees and retirees (the “Rule 2004 Motion”).
According to the Rule 2004 Motion, AMR has made no statements about the treatment of its defined benefit plans, but the possibility of plan termination was raised by AMR’s lead bankruptcy counsel, Harvey Miller, in an interview on Bloomberg Television on December 14, 2011. Several months before Mr. Miller’s interview, AMR’s then-Chairman and American Airlines’ CEO, Gerard Arpey, represented that AMR did not view the Pension Plans as “necessarily as the biggest structural disadvantage we have.” Thus, according to the PBGC, Mr. Miller’s comments represented “a dramatic departure from AMR’s position prior to the bankruptcy filing.”
The PBGC, which insures the Pension Plans, alleges that the termination of the Pension Plans would add significantly to its $26 billion deficit, would give the PBGC a claim of approximately $10 billion, and would result in lost benefits to plan participants in an estimated amount of $1 billion. Given the grave consequences for the plan participants who are counting on receiving their promised benefits and for the federal pension insurance program, the PBGC repeatedly sought information from AMR relating to the issue, but AMR has not replied. Therefore, the PBGC filed the Rule 2004 Motion with the Bankruptcy Court, requesting that the Court authorize and direct discovery from AMR, including the production of documents, examinations, and the taking of depositions under the Federal Rules of Civil Procedure respect to the Pension Plans, including: (i) financial and actuarial information; (ii) financial information related to AMR’s business plan and operations; and (iii) examinations of AMR’s actuaries, financial and business professionals, and employees knowledgeable about the Pension Plans.
The hearing on the Rule 2004 Motion is scheduled for January 27, 2012 at 10:00 a.m. (Eastern). Objections are due by January 20, 2012.
S. Jason Teele, Esq.
Member of the Firm
LOWENSTEIN SANDLER PC